🚁 Drone Profit Series: Legal Setup, Insurance & FAA Part 107 Explained

Starting a drone business in 2025 is one of the smartest moves an entrepreneur can make. From real estate marketing and inspections to weddings, construction, and agriculture, the demand for aerial drone services continues to grow. But before you launch your drone into the sky for paying clients, there are a few critical legal and compliance steps you must take. That’s also where a real estate video app can complement your offerings, giving you more ways to deliver high-value content to clients.

In this post, part of the Drone Profit Series, we’ll break down the three essential steps every drone operator needs to cover:

1. 🏢 Setting up an LLC (Limited Liability Company)
2. 🛡️ Getting insurance (liability + hull coverage)
3. 🎓 Passing the FAA Part 107 exam

These steps protect you legally, build credibility with clients, and ensure you’re operating your business the right way. Let’s dive in.

👉 Watch now on YouTube! Before you launch your drone, make sure you understand the latest Part 107 rules and insurance laws for 2025. Don’t risk fines or lost business—get the facts and fly with confidence! 🚀🛩️

🔥 See what’s new: Real estate video app updates you’ll love!

🏢 Step 1: Set Up Your LLC

The first step in establishing your drone business is creating a Limited Liability Company (LLC). Why? Because it protects your personal assets.

👉 What is an LLC?
An LLC is a legal business entity that separates you (the individual) from your business. If something goes wrong on a shoot—say, your drone crashes into a car, a wedding cake, or even a building—your company is liable, not you personally. That means your house, car, and savings are shielded.

🔑 Benefits of an LLC for Drone Pilots

• Liability Protection: Safeguards your personal assets.
• Professional Credibility: Clients trust businesses more than individuals.
• Tax Flexibility: Allows for business write-offs and more organized finances.
• Contracts & Compliance: Easier to work with larger enterprises requiring vendor compliance.

📝 How to Set Up an LLC

• File through your Secretary of State. For example, in Texas you can apply directly online.
• Use a service like LegalZoom if you want help navigating the process.
• Get your EIN (Employer Identification Number). It’s free and allows you to open a business bank account.
• Open a business bank account. This helps keep income and expenses organized and ready for tax season.

💡 Pro Tip: An EIN and LLC also make it easy to submit W-9s for larger projects, which is common when working with real estate developers, corporate clients, or government contracts.

🛡️ Step 2: Get Insurance (Liability & Hull Coverage)

Flying drones commercially without insurance is risky—and often a deal-breaker for serious clients.

📋 Types of Insurance You Need

1. General Liability Insurance
   Covers property damage and bodily injury caused by your drone operations. Many enterprise clients won’t even hire you without proof of liability insurance.
   • You’ll need a COI (Certificate of Insurance) to show clients.
   • Providers like Next Insurance make this simple and affordable.
2. Hull Insurance (Drone Coverage)
   Covers the drone itself in case of crashes or damage. Drones aren’t cheap, and accidents can happen—even for experienced pilots. Companies like SkyWatch.AI offer on-demand drone insurance.

👉 Why Insurance Matters

• Builds trust with clients 🏗️
• Protects you from unexpected costs 💸
• Meets requirements for larger contracts 📑

Imagine crashing a $2,000 drone at a wedding. Without hull insurance, you eat the cost. With insurance, you file a claim and get a replacement quickly.

🎓 Step 3: Pass the FAA Part 107 Exam

The FAA Part 107 license is the key to flying drones legally for commercial purposes in the United States.

📖 What Is the Part 107 Exam?

• A 60-question multiple-choice test (you need a 70% to pass).
• Covers topics like:
  • Airspace classifications
  • Weather and METAR reports
  • Drone operation rules
  • Emergency procedures
  • Maximum flight altitude (400 feet AGL)
• Must be renewed every 24 months through a recurrent knowledge test.

🛠️ How to Get Certified

1. Find a testing facility. Use the FAA’s PSI test provider site to schedule.
2. Study. Many online courses, YouTube tutorials, and FAA handbooks are available.
3. Take the test. Costs around $175.
4. Receive your Remote Pilot Certificate. Carry it whenever you fly commercially.

💡 Pro Tip: Always carry your license and consider wearing reflective pilot gear. It adds legitimacy if you’re approached while flying.

🚔 What Happens If You Fly Commercially Without Part 107?

Flying drones commercially without a Part 107 license is a huge risk:

• Hefty fines from the FAA (up to $32,666 per incident).
• Loss of credibility with clients.
• Potential legal trouble if accidents occur.

It’s simply not worth the risk. Take the test, get certified, and fly with confidence.

👷‍♂️ Real-World Compliance Tips

Beyond the big three (LLC, insurance, Part 107), here are some extra best practices for drone entrepreneurs:

• Carry contracts on-site. Having a signed scope of work can help if you’re questioned.
• Wear reflective gear. Identify yourself as a professional drone pilot.
• Keep COI copies handy. Some clients will request proof before or during a shoot.
• Respect airspace. Use apps like B4UFLY or AirMap to check restricted areas.
• Stay below 400 feet. This keeps you compliant and safe.

💼 Business First, Setup Second

One of the best pieces of advice for new drone entrepreneurs is this:

👉 Get a client first, then finalize your setup.

Why? Because once you have paying demand, you’ll know how fast to move on licensing, insurance, and entity setup. You can even subcontract a licensed Part 107 pilot for your first job while you finish your certification.

Remember: Cash flow fuels compliance. Don’t let paperwork stop you from finding your first paying client.

🤑 How Compliance Helps You Win Bigger Clients

Getting your LLC, insurance, and Part 107 isn’t just about avoiding fines—it’s about unlocking bigger, better-paying contracts.

• Real estate developers want aerial tours of entire communities.
• Construction companies want progress monitoring.
• Corporate clients need marketing footage of their headquarters.
• Government agencies require drones for inspections.

All these clients demand compliance. By showing your license and COI upfront, you instantly set yourself apart from the “hobbyists.”

📈 Profit Opportunities Beyond Compliance

Once you’ve got your setup, you can expand your offers to increase profits:

• 🏡 Real Estate Virtual Tours (integrate with CloudPano).
• 🚧 Construction Site Progress Photos (monthly retainers).
• 🎥 Event Aerial Videos (weddings, festivals, corporate).
• 🌱 Agriculture Monitoring (crop health analysis).
• 🏭 Industrial Inspections (roofs, solar panels, towers).

With compliance covered, your drone is not just a toy—it’s a business asset.

✅ Key Takeaways

• 🏢 LLC: Protects your assets and establishes credibility.
• 🛡️ Insurance: Liability + hull coverage keep you and your drone safe.
• 🎓 FAA Part 107: Required for commercial flight—study and pass the exam.
• 💡 Bonus Tip: Get a customer first, then finalize setup to avoid wasted time.

Operating legally doesn’t just keep you safe—it positions you as a trusted, professional drone service provider ready to land bigger clients.

📖 Additional Resources:

• How Drones and 360° Virtual Tours Power Remote Oil and Gas Inspections
• Best Cameras and Drones for Oilfield Virtual Tours in 2025
• Best Virtual Tour Tools for Real Estate Photographers and Drone Professionals
• How to Add Drone Footage to MLS Property Pages

🚀 Final Thoughts

Launching a drone business is exciting, but doing it the right way is essential. With an LLC, proper insurance, and your FAA Part 107 certification, you’ll have the foundation to build a profitable, scalable business.

Don’t cut corners. Clients, regulators, and your future self will thank you for handling compliance properly.

Now that you know how to set up your business legally, stay tuned for the next installment of the Drone Profit Series, where we’ll break down pricing strategies and how to maximize profits per flight.

👉 Get Started

• Turn Photos into Scroll-Stopping Videos with  AI – Get Started with PhotoAIVideo Now!
• Create Stunning  360° Virtual Tours in Minutes – Launch Your First Tour with CloudPano!
• New to CloudPano? Start Your  360° Journey Here
• From Scan to Floor  Plan in Minutes – Start With CloudPano’s App

‍